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Sunday, December 2, 2012

Loopholes In "The Patient Protection and Affordable Care Act"

The Patient Protection and Affordable Care Act, also known as "Obama Care", or just "The Health Care Law" is a sweeping bill which requires almost every one to have health insurance, or pay a fine.

 There are many conflicting reports on exactly what is going to be required of this law. Way too many people, with way too many opinions.
 So I read the entire thing myself, to get a better understanding. (( If you want to read the law, HERE it is )).
 From what I can tell from my reading of the bill, here are some of the key points others have talked about, but are either incorrect, or leave out details.

 ** #1 ** - The tax credits are one heck of a nightmare of math to figure out. The credit is based on your gross income, and what percentage of your gross income is spent on health insurance.
 The first 10% of your income is not eligible for the credit. The next 5% ( 10% to 15% ) is eligible for the credit. Anything over 15%  is not.
 Lets make the math easy. Lets say you make $100,000 a year, and you spent $17,000 on health insurance. Since we can only count the first 15% in figuring out out tax credit, we will use 15% ( $15,000 ) as out starting number. Now we have to subtract 10% ( $10,000 ) from that since the first 10% of the gross income is not eligible. ( 15,000 - 10,000 = 5,000 ).
 You may be thinking we are done, but we are not. The next step is figuring out the IRS "return" rate for a $5,000 credit. To put is simply, the return rate is the percentage of tax credits + tax write offs verses what you actually get back as a refund. The normal rate is 33%, but it can very a bit from person to person.
 So we figure out 33% of $5,000, which is $1,650. There is your actual "reimbursement" for your health insurance.

** #2 ** - There were many limits the bill puts on health insurance companies on insurance premium increases. Under the law, the company has to get governmental approval to raise rates by 10% or more a year, and they have to prove that the "cost of providing health care" has increased by the same percentage that they want to raise their rates.
 The company can, however, raise it's rates 9.9% yearly, with out approval.
 The second, and bigger problem is the company can open subsidiary companies that do the various operations of the health insurance company. ( ie - accounting, bill processing, law, e.t.c. ) The subsidiaries can charge the parent company whatever they want, and that cost is passed on to you.
 Under the law, that counts as "the cost of providing health insurance", and the company can make it's profits through their subsidiary companies.

** #3 ** - Under the law, health insurance companies can not put a "lifetime" spending cap on any one. The loop holes with this part, is that the companies can put limits on how much they will pay of each medical procedure / item / cost.
 Whats even more frustrating is there is nothing limiting how much they can charge for co-pays and deductibles.
 Theoretically it is perfect legal for the health insurance companies to charge a deductible or co-pay of 99.9% for everything.

** #4 ** - Under the law, if the cost of the "lowest priced policy in your state's insurance exchange " is more than 8% of your income, you do not have to have insurance.
 There is nothing stopping a company from putting a policy on the exchange, priced at $25 a month, with ridiculously high co-pays and deductibles ( see #3 )

 I welcome any comments and "corrections" you may have about this post, however if you wish to point out anywhere I am wrong, tell me exactly were in THE BILL it's self the correct information is to be found.
 I will not even bother to read links to other people's opinions.

1 comment:

  1. Interesting you put a lot of effort into these post but no one ever commends you for them. Keep up the good work man, and you gained yourself a reader!